Reimbursement : Amounts

Covered Outpatient Drug Reimbursement: 340B Drug Pricing Program

Definition of the 340B Drug Pricing Program

The 340B Program is a federal program that requires drug manufacturers to provide outpatient drugs to eligible covered entities at significantly reduced prices. Section 340B(a)(4) of the Public Health Services Act specifies which covered entities are eligible to participate in the 340B Program. The 340B Program enables covered entities to fully utilize federal resources, reaching more eligible patients and providing more comprehensive services.

Providers may determine if they are an eligible organization/covered entity to participate in the 340B Program, and if so, may register with the 340B Program through the HRSA website. Upon enrollment in the 340B Program, covered entities must determine whether they will use drugs purchased through the 340B Program for their Medicaid members (carve-in) or purchase drugs for their Medicaid members through other mechanisms (carve-out). Covered entities who carve-in must be listed on the HRSA 340B MEF, which is used to assist states and manufacturers in determining which drugs are not subject to Medicaid rebates. Covered entity providers who carve-in are subject to 340B Program reimbursement.

340B Ingredient Cost Reimbursement

The Covered Outpatient Drugs Final Rule, 42 C.F.R. § 447.502, requires state Medicaid programs to reimburse drugs acquired through the 340B Program at their AAC. Because NADAC pricing is not applicable for covered outpatient drugs purchased through the 340B Program, ForwardHealth uses calculated 340B ceiling prices to determine a maximum ingredient cost of drugs purchased through the 340B Program, including specialty drugs purchased through the 340B Program, and to comply with the 340B AAC requirements in the rule. The federal CMS has stated that ceiling price is an appropriate AAC benchmark for drugs purchased through the 340B Program.

The 340B ceiling price refers to the maximum amount a manufacturer can charge a covered entity for the purchase of a covered outpatient drug through the 340B Program. The 340B ceiling price is statutorily defined as the AMP reduced by the rebate percentage, which is commonly referred to as the URA. HRSA maintains the official 340B ceiling prices, which are not available to state Medicaid programs or the public due to confidentiality protections. However, CMS performs the URA calculations based on manufacturer-reported pricing data and specific methodology determined by law. CMS provides the URA and pricing data to states quarterly. ForwardHealth uses this information to determine the calculated 340B ceiling price. ForwardHealth does not adjust claims if manufacturers retroactively change AMP or URA.

Providers are required to submit their AAC when they dispense drugs purchased through the 340B Program to ForwardHealth members. Providers who dispense 340B inventory to ForwardHealth members will be reimbursed at the lesser of the calculated 340B ceiling price or the provider-submitted 340B AAC.

When a calculated 340B ceiling price is not available for a drug, ForwardHealth will reimburse at the lesser of WAC minus 50 percent or the provider-submitted 340B AAC.

Contract Pharmacies

Drugs acquired through the federal 340B Program and dispensed by 340B contract pharmacies are not covered by ForwardHealth. A 340B contract pharmacy must carve-out ForwardHealth from its 340B operation and purchase all drugs billed to ForwardHealth outside of the 340B Program.